tax_ppt_B_div

7/29/2019 tax_ppt_B_div

1/23

Comparison between I.T. and DTC

Presented By:

Tanvi Matondkar PG12067

Shikha Khanna PG12077

Pratik Mehta PG12087Rohan Patel PG12097

Shanmita Basakhetre PG12107

Shalinee Sharma PG12117


2/23

Deductions from Salary

Income Tax

House Rent AllowanceLeast of following is exempt

50% of Salary where theassessee lives in Mumbai,

Delhi ,Chennai & Calcutta and

40% in other cases

Actual HRA received

Excess of rent paid over 10%of Salary.

Direct Tax Code

House Rent Allowance

Any expenditure in excess of

10% of GTI towards paymentof rent (not in receipt of any

HRA)


3/23

Income Tax

Transport Allowance Limit of Rs. 800 pm for normal

individual an Rs. 1600 for blind

Children Education Allowance isprovided @Rs 100pm per childfor maximum 2 children

Children Hostel Allowance is

provided @Rs. 300pm per childfor max. 2 children

Helper, Research and UniformAllowance is provided

Direct Tax Code

Transport Allowance providedbut no limit mentioned

Children Education Allowanceis not provided

Children Hostel Allowance is

not provided

No Helper, Research andUniform Allowance is provided


4/23

Income Tax

Pension Fund:

Contribution made by the employerto the approved pension fund of theemployee should not exceed 12% ofthe salary of employee

Salary = Basic + Dearness Allowance+ Commission

Medical Reimbursement given up toRs 15000

Leave Travel Concession twice in 4years

Leave Encashment

Direct Tax Code

Pension Fund

Contribution made by the employer tothe approved pension fund of theemployee should not exceed 10 % ofthe salary of employee

Salary = Basic + Dearness Allowance

No medical reimbursement given

Leave Travel Concession not mentioned

Nothing given about Leave encashment


5/23

Income Tax

Provident Fund:

Contribution made by the

employer to the approvedprovident fund of theemployee should notexceed 12.5% of the salaryof employee

Interest on approvedprovident fund of theemployee should notexceed 9.5%

Direct Tax Code

Provident Fund:

Contribution made by theemployer to the approved

provident fund of the employeeshould not exceed 12% of thesalary of employee

any amount ofinterest credited,in the financial year, on thebalance to the credit of anemployee in an approved fund tothe extent it does not exceed theamount of interest payable at therate notified by the CentralGovernment;


6/23

Income Tax

Professional Tax paid

Entertainment allowance: availableonly for Government employees

Least of the following is Exempta) 1/5 of Basic Salaryb) Rs 5,000c) Amount Received as Entertainment

Allowance during the year.

Income from Salary includes all

perquisites such as house rent, leavetravel assistance, children educationallowances, encashment of unavailedearned leave on retirement, medicalreimbursement and free/concessionalmedical treatment paid/provided etc isexempt up to a certain limit.

DTC

Nothing mentioned about professional

Tax

No Entertainment Allowance is

provided

All such exemption withdrawn.


7/23

DTC No Allowance such as Medical

Reimbursement is provided in DTC

No Leave Travel Concession is providedfor a period of 4 years

Transport Allowance is given in DTC butno limit mentioned

Pension fund: Contribution by theemployer should not exceed 10%

Expenses incurred by employee forpayment of rent

No professional tax

is provided

No entertainment allowance

Nothing mentioned about Gratuity

City Compensatory Allowance


8/23

House Property


9/23

Tax on House Property & Deduction of Expenses

for Repair and Renewals.

Impact1) The New Proposal is Welcomed, The hardship on Taxation on

Notional Basis gets Removed.

2) Since the Construction cost is increased, the proposed reductionfrom 30% to 20% is unwarranted.

House Property Income is Taxed

on Deemed Rent BasisEven

when not let out.

Deduction of 30% of Gross Rent is

allowed towards repairs.

DTC

House Property is Taxable only

when Rent is Actually

Received/Receivable.

20% on Gross Rent allowable

towards repairs

Income Tax


10/23

Interest Deduction for Housing Loan for Self-

Occupied property.

Income Tax

Interest deduction upto `1.5 lakh

is allowed in case of one house

property which is not let out by

an individual.

DTC

Deduction of `1.5 lakh (including

pre-construction interest

installment) allowed.

Impact:

Since the present practice of deduction upto 1.50 lakh is tocontinue, no benefit on this count can be said to accrue orarise to taxpayers. An adverse impact would be thatrepayment of loan which could be deducted u/s 80C alongwith other items will be discontinued.


11/23

Income Tax

Property Should not be used for

any business carried out by theowner, the Profits arisen out of

which is chargeable to tax.

Income from House Property is

calculated on a whole and taxedon the entire sum even when 2 or

more owners of the same

property exists.

DTC

Property should not be used

for any Business except

Hospital, Hotel, Convention

Storage and Cold Storage. Or

the Land which forms the

part of SEZ.

Income from House Property

is calculated depending on

the amount of share of the

owner in that property, tax is

calculated separately for each

owners.

Impact:

1) The new introduction in DTC has actually exempted some heads like

Hospital, Hotel etc. from the tax which is actually a relief for some

Taxpayers.

2) Tax Payers now has an added advantage that tax will be calculated

separately and not as a whole.


12/23

Tax Incentives


13/23

Deductions for

(Heading)

I.T Act 1961 DTC Code 2010

(1) Specified in Chapter VI-A

Sections 80C to 80U

Chapter III - Part IV

Section 68 to 86

(2) Life Insurance premium:

Sum paid or deposited to

effect or keep in force an

insurance on the life ofpersons specified Insurance

premium

Section 80C:

Should not exceed 20% of

the actual capital sum

assured.

Section 70:

Shall not exceed 5%

percent of the capital

sum assured. Proceeds received on

death are completely

exempt.

Equity linked life

insurance schemes

subject to 5% tax on

distribution

(3) Medical / health

Insurance

Section 80C:

Only up to Rs. 15000 /- p.a

Section 71:

Any sum paid during the

financial year to effect


14/23

Deductions for

(Heading)


(4) Education of Children:

Tuition Fees paid for anytwo children

Section 80C:

Only Of Individual

Section 72:

Of Individual or HUF

(5) Limit to Deduction Individual Limits as

mentioned above.

Combined Limit of Rs.

50,000/- of Section 71, 72

& 73

(6) Loan taken on HouseProperty:

Section 80 (C):(i) Repayment of Loan=

Interest factor +

principle factor

(ii) Purchase and

Construction

(iii) Owned and Let out.Exclusion: Used for

Business or Profession

of Assessee.

(iv) No Limit mentioned to

the amt of deduction

under this Section

Section 74:(i) Only Interest Factor

(ii) Purchase,

Construction, Repair

and Renovation.

(iii) Owned and Not Let

out.(iv) Amt of Deduction shall

not exceed : Rs.

1,50,000/-


15/23

Deductions for

(Heading)


(7) Deduction for medical

treatment and

maintenance of a

dependant person with

disability.

Section 80U:

In this section

Dependent means:

-> dependant wholly or

mainly on such individual or

Hindu undivided family for

his support and

maintenance, and who has

not claimed any deduction

under section 80U in

computing his total income

for the assessment yearrelating to the previous year

Section 78:

In this section, dependant

means spouse, any child or

parents of the individual, or

any member of the Hindu

undivided family, if

-> income in the financial

year is less than twenty-

four thousand rupees.

C O S CO C C CO


16/23

DEDUCTIONS UNDER INCOME TAX ACT UNDER DIRECT TAX CODE

(DTC)

Deduction for Rent Paid Sec. 80GG

Minimum of:

2,000 per month

25% of Adjusted total

Income for the year

The excess of actual rent

paid over 10% of Adjusted

total income

Assessee shall be allowed a

deduction of any expenditure

incurred by him in excess of

10% of his gross total income

maximum of 2,000 per

month, subject to having

regard to the area or place inwhich the accommodation is

situated

Deduction for

political contributions

Any Sum contributed is

allowed as deduction forindividuals as well as

Companies.

Deduction shall be restricted

to 5% of..Average net profits during 3

immediately preceding

financial years (In case of

companies)

Gross total income (in case of

individuals)



17/23


(DTC)

Deduction of

income of Investor

ProtectionFund

Makes no mention about it An Investor protection fund

setup which is notified by

central government if receivesany contribution from the

recognized stock exchange or

commodity exchange shall be

eligible for deduction to the

amount of the contribution

included in gross total income

Deduction of royalty

income of Authors

Resident Individual is allowed a

deduction of an amount which may

be:

A lump sum consideration for

transfer of copyrights of book

Royalty or copyright fees in respect

of his books

Deduction to the extent of 3 lacs

(in case of lump sum)

And 15% to the value of books sold

during the year (in case royalty is

not lump sum)

Resident Individual is allowed

a deduction of an amount

which may be:

A lump sum consideration for

transfer of copyrights of book

Royalty or copyright fees in

respect of his books

Deduction to the extent of 3

lacs



18/23


(DTC)

Deduction in respect of royalty

on patents

Any income received by the

person by way of royalty in

respect of a patent registered on

or after the 1st day of April, 2003under the Patents Act, 1970 shall

be allowed for a deduction

to the extent it does not exceed

the amount of royalty allowable

under the terms and conditions of

a licence settled by the Controllerunder the Patents Act, 1970, if a

compulsory licence is granted in

respect of any patent under that

Actor

3 lakhs

(whichever is lower)

In case of income earned

outside India then only that

portion of income which is

brought into India within the

period of 6 months from the

end of the pervious year shallbe considered.

Any income received by the

person by way of royalty in

respect of a patent registeredon or after the 1st day of April,

2003 under the Patents Act,

1970 shall be allowed for a

deduction

to the extent it does not

exceed the amount of royaltyallowable under the terms and

conditions of a licence settled

by the Controller under the

Patents Act, 1970, if a

compulsory licence is granted

in respect of any patent underthat Actor

3 lakhs

(whichever is lower)



19/23


(DTC)

Deduction of income of

cooperative society from

banking activities.

Makes no mention about it A primary co-operative

society shall be allowed for a

deduction to the extent ofprofits derived from the

business of providing banking,

or credit, facility to its

Members

Deduction of income of

primary Co-operative

Societies

Makes no mention about it A primary co-operative

society shall be allowed for a

deduction

To the amount of profits

derived from agriculture or

agriculture related activities

The amount of income

derived from any other

activity, to the extent it does

not exceed 1 Lac



20/23


(DTC)

Deduction in respect of

certain donation for scientific

research or rural development

A person having income under

the head profits and gains

from business and profession

shall be allowed for 100%

deduction to the extent of

amount actually paid towards

approved research

associations, rural

development programme,any association approved by

National Committee

Makes no mention about it



21/23


(DTC)

Deduction in respect of profits

and gains from undertakings

or enterprises engaged in

infrastructure development

An assessee whose gross total

income includes any profits

and gains derived by carrying

on a business of infrastructure

development shall be allowed

for deduction as under




22/23


(DTC)


and gains by an undertaking

engaged in development of

SEZs

Deduction is allowed of an

amount equal to 100% of the

profits and gains from such

business for 10 out of 15

consecutive years beginning

from the year in which a

special economic zone has

been notified by the

government



and gains from business of

collecting and processing of

bio-degradable waste

Deduction is allowed of an

amount equal to 100% of the

profit derived from such

business for a period of 5

consecutive years from the

year of commencement of

business




23/23


(DTC)

Deduction in respect of

employment of new workmen

Deduction is applicable to an

Indian company engaged in

manufacture of articles.

Deductions are as follows:


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